Development

One little-discussed reason housing costs are rising in Charlotte

A pedestrian turns to watch the demolition of a former quadplex building at the corner of Camden Road and West Boulevard to make way for the new Camden Gallery Apartments in 2013. Some housing watchers say Charlotte could use more duplexes, triplexes and quadplexes, which are often more affordable.
A pedestrian turns to watch the demolition of a former quadplex building at the corner of Camden Road and West Boulevard to make way for the new Camden Gallery Apartments in 2013. Some housing watchers say Charlotte could use more duplexes, triplexes and quadplexes, which are often more affordable. dtfoster@charlotteobserver.com

There’s been a lot of focus in recent months on the rising cost of housing in Charlotte, especially after protesters highlighted economic inequality in the wake of a September police shooting that killed an African-American man.

The spotlight tends to fall on new apartments (Average rent is at $1,052, up 35 percent in the past five years) and single-family houses (Average sales price up 6.2 percent from a year ago). And that, according to housing experts at an Urban Land Institute of Charlotte forum this week, might actually be part of the problem.

“Our housing is almost two extremes: Large apartments and single-family homes,” said Assistant City Manager Debra Campbell. “There’s not much in between.”

The numbers back her up: There’s a record-breaking boom in apartments, with more than 10,000 under construction and more than 13,000 more planned, according to apartment-tracking firm Real Data. And Mecklenburg County has issued 3,238 single-family building permits so far this year, as of October.

The number of duplexes permitted: 41, countywide. So, why does that matter?

“Duplexes, triplexes and quadplexes are an option that’s more affordable and could be easily blended into existing neighborhoods,” said Campbell. In addition to offering more housing per acre (and more supply should, in theory, mean a lower price), a building with three or four units is unlikely to encounter the fierce resistance from neighbors that a 300-unit apartment building often runs into.

The apartment market has tilted firmly towards the upscale in the past decade, with developers fighting to outdo each other with luxury amenities from dog-washes to massage rooms to wine fridges in every unit.

Along with higher land prices, that has pushed up the cost of developing new buildings in Charlotte. One developer at the ULI forum said a new apartment could cost $165 per square foot to build, or more if the building includes a parking deck. At that price, a 1,000 square-foot, 1-bedroom unit would cost $165,000 to build – necessitating relatively high rent to make a return on the investment.

Single-family houses are more expensive too, as a result of higher land prices, building material and labor costs, developers said.

“We’ve seen our business migrate up. Our average sales price is probably double what it was before the recession,” said Charles Teal, of homebuilder Saussy Burbank.

There’s a term for the housing that falls in between single-family houses and big apartment complexes – housing that’s much less common in the U.S. than it used to be. Urban planners call it the “missing middle.” MissingMiddleHousing.org, a group dedicated to promoting such housing, calls duplexes, triplexes and quadplexes “a fundamental building block in pre-1940s neighborhoods.”

With a footprint similar to single-family houses and smaller unit sizes, “missing middle” housing is typically cheaper than alternatives on either end of the spectrum. And it’s not uncommon in Charlotte’s older, close-in neighborhoods: A stroll around Dilworth will reveal dozens of duplexes, triplexes and quadplexes tucked in among the single-family homes lining leafy streets.

A few developers in Charlotte are trying to build such units. The Drakeford Company recently filed a rezoning petition to build two quadplexes on McClintock Road at St. Julien Street. But they’re definitely not the norm.

In a survey released by ULI’s Charlotte chapter this week, many respondents said they weren’t satisfied with the range of housing types available in the city. And the responses varied according to income level: 56 percent of low-income residents said they were satisfied with the range of housing types in Charlotte, compared to 63 percent of middle-income respondents.

Campbell said more developers should consider building housing types beyond single-family or big apartments. The city offers a “density bonus” that can allow them to build more units on existing lots without going through the often-cumbersome rezoning process – for example, two triplexes instead of three single-family houses. But the catch is that some of those units must be kept as affordable housing, which is a major deterrent for many developers.

And building more densely won’t necessarily produce cheaper housing, especially in already expensive areas. On Kenilworth Avenue in Dilworth, for example, Meeting Street Homes built eight townhouses on a vacant residential lot. Prices started in the low $400,000-range.

Campbell said Charlotte has to look at all options for increasing the supply of affordable housing.

“If people cannot afford to live in this community, they won’t move to this community,” she said.

Ely Portillo: 704-358-5041, @ESPortillo

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